Data & Research July 24, 2017

New ESOPs Are Created Each Year

Research from the NCEO finds ESOPs still hold a significant amount of retirement plan assets.
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As of 2014, the most recent year for which data is available, there were 6,717 employee stock ownership plans (ESOPs) in the United States, holding total assets of more than $1.3 trillion, according the National Center for Employee Ownership (NCEO).

These plans cover over 14 million participants, of whom 10.6 million are active participants—those currently employed and covered by an ESOP.

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There were 5,533 stand-alone ESOPs, covering approximately 1.8 million participants, with more than $130 billion in plan assets. There were 1,184 KSOPs (ESOPs with a 401(k) plan feature), covering approximately 12.3 million plan participants, with nearly $1.2 trillion in plan assets. These numbers are sourced from the NCEO’s analysis of the Private Pension Plan (PPP) Research File made available by the Department of Labor from data reported on the Form 5500.

Since 2010, an average of 229 new ESOPs have been created each year. The manufacturing industry sponsored more ESOPs than any other industry, at 22%, followed by professional/scientific/technical services (18%) and finance/insurance/real estate (17%). Nearly one-third (32%) of ESOPs/KSOPs are sponsored in the Midwest, with 23% in the West, 29% in the South and 17% in the Northeast.

The NCEO notes that from 2002 to 2014, despite a downtrend in the number of individual ESOPs, the number of participants has steadily increased.

More information is at http://www.nceo.org/articles/esops-by-the-numbers.

Compliance July 24, 2017

Aon Pulls Company Stock From 401(k) Plan

On December 1, 2017, the Aon Stock Fund will be liquidated and removed from the plan.
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In a Form 11-K filing with the Securities and Exchange Commission (SEC), Aon plc announced the divestment of company stock from the Aon Savings Plan.

According to the filing, effective April 1, the Aon Stock Fund was discontinued as an active investment option in the plan. After March 31, participants were not able to contribute or transfer any savings into the Aon Stock Fund (including employee contributions, Aon matching contributions, fund transfers-in, loan repayments, and rollover contributions).                    

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Participants that contributed to the fund will need to select a different investment option or options. If the participant does not select a different investment option, any amounts that would normally have been directed to the Aon Stock Fund will be automatically re-directed to the applicable age-appropriate target-date fund (assuming retirement at age 65) in the plan.

On December 1, 2017, the Aon Stock Fund will be liquidated and removed from the plan. As of December 31, 2016, the company stock fund held a little more than $240,000,000 in plan assets.

In a statement to PLANADVISER, Aon said: “We have eliminated the option to invest in the company’s stock to encourage greater diversification of retirement savings.  Colleagues will reallocate their investment in the Aon Stock Fund into another, better diversified, investment option within the 401k plan.”

The form also noted that on February 11, Aon announced an agreement to sell its benefits and HR platform to Alight Solutions (formerly Tempo Acquisition, LLC, an entity formed and controlled by the Blackstone Group L.P.). The sale closed in May 2017. Impacted employees’ Aon Savings Plan account balances will be transferred to the new company’s plan, and they will cease participation in Aon’s plan.

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